AT&T tries to defend its data pricing

By Felix Salmon

June 4, 2010

blog entry yesterday on his company's new data plans. He phoned me this morning, and I told him that I assumed the official AT&T press release -- which I linked to from my blog -- had all the information that the company wanted to release, but that if he wanted to tell me anything else, he was more than welcome to.
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Mark Siegel, the executive director of media relations at AT&T, was upset that I didn’t phone him before posting my blog entry yesterday on his company’s new data plans. He phoned me this morning, and I told him that I assumed the official AT&T press release — which I linked to from my blog — had all the information that the company wanted to release, but that if he wanted to tell me anything else, he was more than welcome to.

And indeed, he did clear up one thing for me. If you’re on the Data Plus plan, that costs you $15 for 200 MB no matter how much data you use. If you use 201 MB in a month, that’s $30; if you use 401 MB, it’s $45, and so on. If you go up to say 1.9 GB in a month, that’s $150 — six times the $25 you would pay to consume the same amount of data on the Data Pro plan.

Is there any point, I asked Siegel, at which AT&T will help a brother out and automatically switch a heavy data user from Data Plus to Data Pro? No, he told me: “Our assumption is that people are intelligent enough to see that they’re going over. People are way smart enough to manage their own usage.”

This puts a large and unnecessary onus onto people with phones, especially phones with WiFi capability. If you only use data-heavy applications like YouTube or Pandora when you’re connected to a WiFi hotspot, you should be fine with the lower data plan — until that fateful day when your WiFi craps out without you noticing, and you rapidly rack up a huge amount of data usage inadvertently.

I also asked Siegel what plan I should use, in the light of my detailed list of how much data I’ve consumed over the past eight months. “In your case it might be a toss-up”, he said, unhelpfully. “It’s up to you to decide.”

Well, that’s one choice I don’t want. Siegel thinks — or at least he told me — that “people don’t want one plan”, and that something along the lines of the plan I proposed in my post ($15 for the first 200 MB, and then $10 per GB thereafter) would constitute trying to fit all of AT&T’s customers into one mold — something he says that, after “months and months of speaking to consumers”, AT&T has learned that they don’t want.

So I asked him who would lose out from that kind of plan. He said: “For somebody who is a relatively light user, a gigabyte would be a much much much higher level of usage than that person would ever engage in, and why would you charge that at all.”

Somehow he forgot that AT&T, with its new plans, is asking anybody who’s likely to go over 200 MB in one month to get charged for two gigabytes of data each month — or face paying more for 201 MB than they would otherwise have to pay for 1.9 GB.

Siegel’s message, which I’m happy to pass on, is this: “One of the things we found is that people don’t want one plan. They don’t want one size that fits all.” Well, I want one plan, and it’s clear to me that AT&T new pricing scheme is deliberately constructed to ensure that a lot of people end up making unnecessary payments — either for using more than 200 MB when they’re on the Data Plus plan, or for using less than 200 MB when they’re on the Data Pro plan.

Of course, if AT&T weren’t evil, it could fix all this at a stroke, and it wouldn’t even need to change the plan pricing. All it would need to do is charge people for data usage ex post, rather than ex ante: if you used less than 200 MB in one month, it would charge you on the Data Plus plan, and if you used more than 200 MB it would charge you on the Data Pro plan.

But that would be far too easy for AT&T’s customers, and it would deprive AT&T of all that extra revenue from people who guess their data-usage needs incorrectly. Obviously AT&T prefers to make life harder for its customers, if that’s going to give it a little bit more money.